The financial services arm will own 6.1% stake in RIL, which is valued at Rs 1.01 lakh crore or around $12 billion. This stake will be used to fund its regulatory capital requirement.
Currently, the stake is calculated as part of the promoter group where the ultimate beneficiary is Reliance Industrial Investment and Holdings. The listing of JFS with treasury shares would then effectively distribute this stake to all existing shareholders.
With stake being transferred to JFS, the value of the stake per share of JFS comes to Rs 154.4 apiece, but that is without ascribing a holding company discount.
Assuming an up to 50% holding company discount, the price per share would be at least Rs 77 apiece. A lesser discount, say of 30%, will give a value of Rs 108 apiece. To be conservative, at a 50% holding company discount, Jio Financial Services could be valued at a little over Rs 50,591 crore.
If the stake is sold for regulatory capital, it could be bought by the promoter group to maintain their stake in RIL at current level—just above 50%.
If this stake is not monetised, then JFS would get a regular dividend income from Reliance Industries. Going by last year’s final dividend payout of Rs 8 apiece, that amounts to around Rs 330 crore.
The scheme will envisage acquiring liquid assets—RIL treasury stock—to provide regulatory capital for lending to consumers, merchants to incubate financial verticals like insurance, payments, digital broking, and asset management for at least the next three years of business operations.
RIL already has regulatory licences for the key businesses in place, the company said.
These businesses could be part of Jio Financial Services:
Reliance Retail Finance Ltd.
Reliance Retail Insurance Broking Ltd.
Reliance Petroleum Retail Ltd.
Reliance Payment Solutions Ltd.
Jio Information Aggregator Services Ltd.
JFS, through Reliance Retail Finance, will serve the retail and small-business focused product categories by leveraging the technological capability of Reliance and focus on digital delivery of financial products.